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Monitoring of Public Procurement System in 2011-2013

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Monitoring of Public Procurement System in 2011-2013 2014 Monitoring of Public Procurement System in 2011-2013 Working Papers The target directions of these working paper series were: A) The institute of the complaints in the procurement system B) Single-Source Procurement C) E-Procurement D) Transparency and consistency of the information posted on the official procurement website Translated from original by Artak Manukyan World Bank 6/25/2014 Table of Contents MONITORING OF PROCUREMENT COMPLAINT REVIEW BOARD'S ACTIVITIES .......... 4 INTRODUCTION .................................................................................................................................. 5 BEST PRACTICES ................................................................................................................................ 6 METHODOLOGY ................................................................................................................................. 8 MONITORING RESULTS .................................................................................................................... 9 REVEALED PROBLEMS ................................................................................................................... 14 RECOMMENDATIONS ...................................................................................................................... 16 THE CHARACTERISTICS OF ELECTRONIC PROCUREMENT IN ARMENIA .................... 19 INTRODUCTION ................................................................................................................................ 20 MONITORING METHODOLOGY ..................................................................................................... 24 MONITORING RESULTS .................................................................................................................. 26 PROBLEMS......................................................................................................................................... 30 THE CHARACTERISTICS OF SINGLE SOURCE PROCUREMENT IN ARMENIA .............. 37 INTRODUCTION ................................................................................................................................ 38 THE CHARACTERISTICS OF SINGLE SOURCE PROCUREMENT IN ARMENIA ...................... 40 METHODOLOGY ............................................................................................................................... 42 FINDINGS ........................................................................................................................................... 48 SUGGESTIONS .................................................................................................................................. 49 MONITORING OF SOME MAIN COMPONENTS OF PUBLIC PROCUREMENT SYSTEM . 58 INTRODUCTION ................................................................................................................................ 59 ANALYSIS OF PPL’S SUPPORTING SECONDARY LEGISLATION FOR 2011-2012 .................. 62 ANALYSIS OF PSC’S FUNCTIONS .................................................................................................. 73 ANALYSIS OF PROCUREMENT OFFICIAL WEBSITE .................................................................. 75 ANALYSIS OF PROCUREMENT PLANNING AND TECHNICAL SPECIFICATIONS ................. 88 PROBLEMS OF LEGISLATIVE NATURE ........................................................................................ 93 2 LIST OF ABBRIVATIONS AB Authorized Body AMD1 Armenian Dram CBA Central Bank of Armenia Complaint Board Procurement Complaint Review Board CRC Complaint Review Commission ECJ European Court of Justice GoA Government of Armenia GPA Agreement on Government Procurement. MoF Ministry of Finance MoTC Ministry of Transport and Communication PPL Public Procurement Law PSC Procurement Support Center PIU Project Implementation Unit SCPEC State Commission for the Protection of Economic Competition SNPO State non-profit organization SPA State Procurement Agency TIAC Transparency International Anti-Corruption Center NGO RA Republic of Armenia 1 As of June 27, 2014 $1 USD is 407 AMD. 3 MONITORING OF PROCUREMENT COMPLAINT REVIEW BOARD'S ACTIVITIES 4 INTRODUCTION The current Public Procurement Law (PPL), came into force on 1 January 2011, and was developed to meet the basic requirements of the 1994 WTO plurilateral Agreement on Government Procurement. It includes several legal instruments of the 2004 EU Public Procurement Directives. By comparing the current PPL with the previous one the following positive developments were noticed; a) Since 2011 the complaint review process was outsourced from the Republic of Armenia (RA) Ministry of Finance (MoF) and the conflict of interest existing during complaint review process was eliminated,2 b) Before 2011 the selection of members of the complaint board was not based on clear criteria; since 2011 the tests and the questionary was developed for selection purposes; Based on these developments theoretically the independence and professionalism of Complaint Board was enhanced. 2 According to the previous PPL MoF was either a) Authorized Body (AB) responsible for the development and implementation of the public finance management policy or b)body responsible for complaint review. 5 BEST PRACTICES Analysis of the available best practices indicates that there are developed principles, which should be lied in the basis of complaint systems. Non-discrimination: Access to remedies should be open to all economic operators without discrimination, especially on grounds of nationality. Effectiveness: Remedies must have sufficient power to ensure observance of public procurement rules and review must be as rapid as possible. This means that contracting authorities should try to facilitate the proper conduct of all legal procedures and should always comply with decisions concerning remedies. Legal procedures and the conduct of review bodies must ensure for speedy consideration and resolution. Transparency: Contracting authorities must ensure that through the tender documents themselves as well as in the notifications of contracting decisions, maximum information is provided to economic operators on: Rights to remedies under the law, in particular remedies having to do with the conduct of the award procedure, Relevant procedural rules, in particular deadlines, All information on how contracting decisions were reached, to the extent that this information is relevant to economic operators. Analysis of best practices confirm, that it is important to ensure that three types of remedies are available: interim measures, set aside and damages. Interim measures: Interim measures are provisional measures taken in relation to the contract notice and any contracting decision, including the contract award decision. The aim of interim measures is to prevent the creation of unalterable situations and to avoid the continuation of the contract award procedure without an economic operator that would otherwise have been able to participate and possibly be awarded the contract. These aims may only be achieved if the local legal system provides an effective, simple and speedy possibility of obtaining interim relief and if the competent review body is not reluctant to grant interim relief as a matter of principle. The following interim measures can typically be ordered: 1. Suspension of the implementation of any decision taken by the contracting authority, 2. Suspension of the whole contract award procedure, 6 3. Provisional correction of a breach (this depends on local law and is rather unusual) Set aside: The application for the set-aside remedy cancels or renders ineffective a contracting decision taken unlawfully or otherwise corrects an unlawful situation. The aim of set-aside is to correct proven irregularities. This aim is only achieved if the local legal system provides an effective possibility of cancelling an unlawful specification or contracting decision and if the competent review body reviews the reasonableness of contracting decisions. The following measures can typically be ordered: 1. Removal of discriminatory technical, economic or financial specifications in the contract notice, tender documents or any other document relating to the contract award procedure; 2. Annulment of an unlawful contracting decision, 3. Positive correction of any unlawful document or contracting decision, for example an order of the contracting authority to amend or delete an unlawful clause in the tender documents or to reinstate an economic operator that had been unlawfully excluded. Damages: Damages are compensation paid to economic operators harmed by an infringement of the public procurement rules. The procedure and venue for bringing claims for damages depends on local legislation, which sets the filing rules, deadlines, requirements of proof, and extent of compensation (for example, the conditions under which tendering costs can be recovered). This remedy aims to compensate harmed economic operators. The measures that are ordered if a claim for damages is successful are the compensation of all harms suffered by the economic operator, which usually includes actual costs incurred and, exceptionally, lost profits. The compensation must be full–however, it is often very difficult to establish the extent of the damage suffered in a competitive process. This remedy does not interfere with the contract award procedure, its progress or conclusion. Transparency International Anti-Corruption Center NGO (TIAC) conducted public
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